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Section 115J/115JB targeted corporate entities for imposing a Minimum Alternate Tax on their book profit. It was noticed by the legislature that as a result of various tax concessions and incentives certain companies making huge profits and also declaring substantial dividends have been managing their affairs in such a way as to avoid payment of income tax.
We see no reason to take a different view from that adopted by the Bombay High Court. However, Mr Sabharwal, appearing on behalf of the revenue, raised a pointed question as to whether, in fact, the provision for payment of bonus in this case was actually an ascertained liability.
We have attached below an excel utility to compute the MAT as per provisions of Section 115JB of Income Tax Act, 1961. While preparing the utility Author of the utility has considered various income-tax cases decided by various judicial authorities both in favour of assessee and in favour of revenue. Utility is in Excel File Format […]
In case of Rotork Controls India (P.) Ltd. v. CIT [2009] 314 ITR 62, the Supreme Court in the context of an assessee making provision for estimated expenditure towards warranty observed that provision is a liability which can be measured only by using substantial degree of estimation. Such provision is recognized when an assessee had a present obligation as a result of past events, and it is possible that any outflow of resources will be required to settle the obligation and further a reliable estimate can be made of the amount of obligation.
Section 115JB, in fact, in no way either denies the benefit given under Section 80-IB or reduces the same. While the appellant-assessee can claim the benefit under Section 80-IB of the Act and it is not denied per se to the appellant-assessee, in the given case, the provisions of Section 115JB may be attracted or may not be attracted depending upon the nature or legal composition of the assessee.
Whether this agreed addition is to be added while calculating book profit under section 115JB of the Act. Section 115JB provides that where in the case of an assessee being a Company, the income tax payable on total income as computed under this Act is less than 10% (applicable in the impugned Assessment Year) of its book profit, such book profit shall be deemed to be the total income of the assessee.
On perusal of orders of authorities below, we agree that facts and issue involved in Ground No.2 of appeal for assessment year 2009-10 are identical to ground No.2 & 3 of appeal for assessment year 2008-09, which we have discussed in paras 7 to 9 hereinabove. For the reasons mentioned in para 9 hereinabove, we allow Ground No.2 of appeal taken by the assessee for assessment year 2009-10.
There is no quarrel on the point that the assessee, being an insurance company is not required to prepare its accounts as per Parts II & III of Schedule VI of the Companies Act, 1956. Sub-section (2) of section 211 are required every profit and loss accounts of the Companies shall be prepared as per the requirement of Part II of Schedule VI.
Unit in SEZ will be covered by sub-section(6) to section 115JB of the Act irrespective of the fact that those units were claiming deduction u/s.10A of the Act. We also observe that benefit given to SEZ unit from the applicability of provisions of section 115JB has been withdrawn by the Finance Act, 2011 by inserting a proviso to section 115JB(6) of the Act,
After going through the assessment order, annexure-1, we are of the considered opinion that the assessee may have submitted his returns showing his total income as ‘NIL’ and has shown book profit of Rs. 2,05,86,930/- under Section 115JB but A.O. has not proceeded to consider the case of the petitioner under Section 115JB and clearly mentioned in first para of the order itself that “the case was duly processed u/s 143(1)(a) and thereafter on selection of the case of scrutiny, statutory notices u/s 143(2) & 142(1) were issued.” Such notices were duly responded by the assessee’s representative and the case was contested and proceeded under Section 143(1)(a) and assessment was made under Section 143(3) of the Act of 1961.
